The nexus between agricultural loan access and farm income of small-scale cassava processors in Oyo State, Nigeria: An endogenous switching regression approach
An agricultural loan is an essential tool for transforming commercial agriculture into a profitable venture. In view of this, this study investigated determinants of access to agricultural loans and the profitability of small-scale cassava processing. It also tested whether access to agricultural lo...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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University of Belgrade - Faculty of Agriculture, Belgrade
2022-01-01
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| Series: | Journal of Agricultural Sciences (Belgrade) |
| Subjects: | |
| Online Access: | https://scindeks-clanci.ceon.rs/data/pdf/1450-8109/2022/1450-81092201083O.pdf |
| Summary: | An agricultural loan is an essential tool for transforming commercial agriculture into a profitable venture. In view of this, this study investigated determinants of access to agricultural loans and the profitability of small-scale cassava processing. It also tested whether access to agricultural loans affected the net farm income of cassava processors in Oyo State using budgetary analysis, endogenous switching regression model (ESRM) and augmented inverse probability weighted regression adjustment (AIPWRA) as a robustness check. A multistage random sampling procedure was employed to gather information from 120 cassava processors. The results revealed that female processors dominated cassava processing, and processors had a mean age of 41.1±7.5 years. Only 23% of the respondents had agricultural loan access, which was primarily sourced informally. Budgetary analysis showed that processors earned an average net farm income of N10,449.87 (US$29.03) in a production cycle. Endogenous switching regression analysis revealed that married and educated cassava processors that were socially inclusive and that had a large processing unit and earned meagre offfarm income were more likely to access agricultural loans. Furthermore, education (b=0.019, p<0.1), number of family members working (b=0.241, p<0.01), processors' experience (b=0.028, p<0.05) and enterprise size (b=0.001, p<0.01) influenced the net farm income of processors that had access to agricultural loans. The treatment effect from the AIPWRA result revealed that ATT and POM for cassava processing were 4.5% and 37%, respectively. Business risks, small enterprise size and high interest rate were the major constraints to agricultural loan access. From the foregoing, a need for a technical support system among cassava processors is inevitable. More so, cassava processors should be encouraged to join trade associations, and young processors should be given priority in credit initiatives for cassava processing. |
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| ISSN: | 1450-8109 2406-0968 |